Unless you are a dedicated bear and generally
short the market, these comments do not reflect
poorly on BVSN at all.
By your analysis you should have been short
MSFT/CSCO/DELL for last 4 years; and short
YHOO/AOL/AMZN/EBAY from day-1. Of course this
would have been an absurd play.
Or, short Coke/Gillette (PE~45); GE(38); IBM(35); LU(90).
They got practically no growth compared to BVSNs and YHOOs.
BVSN: The E is about $0.25, net margin is about 15%,
the growth rate about 80%, Px/Sales is 35.
By this rate, next year the P/S will be about 20. Should
the net margin increase ? My guess would be - yes, say 21%.
This should bring E=$0.63. Now it's PE is like MSFT. Look
for the net margin to hit 30% in 2 years. Another year,
it will be comparable to SUNW (a company with < 10% net margin).
Never mind the acceleration in the ecommerce/personalization
arena.
So, a price of 72 may be high but the order of magnitude
(log 2) seems OK. What's the true value ? who knows. It
fluctuates a lot...
Oh, BTW, that "PE should be < growth rate" is somewhat
outdated. Look at the riskless rate (6%) and do the math.
Regards
Dinesh |
